Would SISU accept a £4m bid for the club? (1 Viewer)

KersleyDigs · Jan 8, 2012

The only tangible assets they have in the club are:

Jutkiewicz - £2m
Thomas - £1m
Keogh - £1m

They would not accept a £1 bid from Hoffman, when they can sell these players to recoup some money, before cutting there losses.

IF Hoffman has a billionaire lined up, he simply needs to buy the clubs assets off SISU.

Lord_Nampil · Jan 8, 2012

remember we still ow 600K to everton for Juke + im sure i heard they had a 25% sell on clause! so in reality we would get next to nothing for him?? Dont think Thomas would go he seems a pretty smart kid, Keogh is worth alot more than a 1million!

Though can you say the staff of the football club is an assist?

TheParsonsHose · Jan 8, 2012

What about cranie?

KersleyDigs · Jan 8, 2012

I just saying that the only assets worth anything to the potential buyers, are the players that they couldn't easily replace.

Investers can wait for sisu to sell those players, then put us into admin. They would then have to take on the club and shell out £4m + to replace the playing staff. Is there any point waiting?!!!

Lord_Nampil · Jan 8, 2012

Can you really call players assists?

I don't think you can!

KersleyDigs · Jan 8, 2012

Anything that has a value is called an asset. I know what you're getting at though.

Cranie and Clingan will not re-sign and I also believe they will hold out for a bosman move, as they will get a larger signing on fee as a free agent.

Godiva · Jan 8, 2012

I can see sisu accepting a bid of £1 - IF the new owners either pay out the loans immidiately and in full, OR pay a large chunk of the loans and agree to a reasonable pay back scheme for the rest. In that case the remaining loans will probably hold an interest of 6-7% pa (mind you, we do not pay interest on the loans today, so that scenario will only increase the operational costs).

It's not about assets and it's not about the shares - it's all about the loans.

dick turpin · Jan 8, 2012

I just do not understand the reason the club are waiting on these players to sign there new contracts..
After the last few players were allowed to run there contracts down,the club should have made a stand.
All players to be offered a new contract,those who dont sign should have being put on the transfer list.
why wait on them to run them down...

SIGN OR PISS OFF simples .......ehhhh,,,
no lets wait and let them run them down then they might sign again for us ??
AT tried it with KW but that backfired on him.. just stand firm to them SIGN or PISS OFF

DICKTURPS

bamalamafizzfazz · Jan 8, 2012

Thomas £1M :laugh:

KersleyDigs · Jan 8, 2012

Well Liverpool were going to pay £1.5m for Thomas before he got injured! :jerkit:

junglej13 · Jan 8, 2012

bamalamafizzfazz said:
Thomas £1M :laugh:

Thomas is the biggest asset at the club I think.

DazzleTommyDazzle · Jan 8, 2012

Godiva said:
I can see sisu accepting a bid of £1 - IF the new owners either pay out the loans immidiately and in full, OR pay a large chunk of the loans and agree to a reasonable pay back scheme for the rest. In that case the remaining loans will probably hold an interest of 6-7% pa (mind you, we do not pay interest on the loans today, so that scenario will only increase the operational costs).

It's not about assets and it's not about the shares - it's all about the loans.

I agree that the key issue is the loans, but don't believe that any sane businessman would pay the loans in full or "a large chunk of them".

Putting any issues of blame to one side, the situation is that SISU's investment in the club (whatever the true figure is) has gone badly wrong. SISU's investment is not a relevant issue in any valuation of the club, where it is relevant is in the write-off that SISU would have to take if/when they divest.

You can value the club in terms of the current value of its expected future cash flows (so no positive value there...) or its net assets. I would agree that some of the players have a current resale value, but if, say, Juke and Keogh are sold I think we'd all agree that any faint chance of staying up would go with them. Consequently any buyer would then need to bear in mind the major loss of revenue that relegation would bring. Also alongside any value of the players, you need to factor in any third party liabilities. I have no idea what these might be, but would not be surprised if we are building up some debts to HMRC, the Arena company etc.

On balance if the £12m figure being reported (in yesterday's Telegraph blog on the game) is true - then it's a much more generous valuation than I'd have expected.

wingy · Jan 8, 2012

Could that suggest as it does appear generous that the loan side would have been factored in in and dealtwith.

Jimmy Hill's Chin · Jan 8, 2012

Get the impression that SISU won't sell to the Hoff out of spite and as there are no other bidders the club will remain in their ownership for the foreseeable future and will just be run down.

DazzleTommyDazzle · Jan 8, 2012

wingy said:
Could that suggest as it does appear generous that the loan side would have been factored in in and dealtwith.

Wingy - I'm assuming that any payment for the shares would be a nominal sum (Hoffman's famous £1), so any "real" money would be in settlement of SISU's loans.

Godiva · Jan 8, 2012

DazzleTommyDazzle said:
I agree that the key issue is the loans, but don't believe that any sane businessman would pay the loans in full or "a large chunk of them".

Putting any issues of blame to one side, the situation is that SISU's investment in the club (whatever the true figure is) has gone badly wrong. SISU's investment is not a relevant issue in any valuation of the club, where it is relevant is in the write-off that SISU would have to take if/when they divest.

You can value the club in terms of the current value of its expected future cash flows (so no positive value there...) or its net assets. I would agree that some of the players have a current resale value, but if, say, Juke and Keogh are sold I think we'd all agree that any faint chance of staying up would go with them. Consequently any buyer would then need to bear in mind the major loss of revenue that relegation would bring. Also alongside any value of the players, you need to factor in any third party liabilities. I have no idea what these might be, but would not be surprised if we are building up some debts to HMRC, the Arena company etc.

On balance if the £12m figure being reported (in yesterday's Telegraph blog on the game) is true - then it's a much more generous valuation than I'd have expected.

When sisu decided to place their investments as loans as opposed to share equity they knew exactly what they were doing.
In any 'normal' take over situation the battle would be about the share value, but as sisu bought the shares at £1 they are not really in risk of takeing a hit on them.
And as the loans are not carrying any interests or a periodic installment plan, then the loans cannot be defaulted so only the operational costs and smaller external debts can be defaulted and put the company into administration.

Unfortunately, when the previous board were shown the door, the club had very little cash left and still looked at a conciderable yearly loss. The costs have been cut heavily - the club says by approximately 40% - yet, the loss for this financial year may still be around £3-3.5mil. But not all costs are cashflow dependant, depreciation and amortization are not, so in all the club is probably looking at a yearly cash deficit of around £2mil. My guess is, that selling Juke in this window and even getting in 1 or 2 players on loan from PL or permanently from lower leagues will secure the cash flow and get the club close to break even.

If that is true - and mind you it is all guesswork until we see the actual financial reports - then I fail to see why sisu would accept anything but full value for the loans.
I don't think sisu is planning for relegation and they probably won't until it's certain, and in any present negotiation they will not accept any arguement about what may or may not happen in the future.

DazzleTommyDazzle · Jan 8, 2012

Godiva said:
When sisu decided to place their investments as loans as opposed to share equity they knew exactly what they were doing.
In any 'normal' take over situation the battle would be about the share value, but as sisu bought the shares at £1 they are not really in risk of takeing a hit on them.
And as the loans are not carrying any interests or a periodic installment plan, then the loans cannot be defaulted so only the operational costs and smaller external debts can be defaulted and put the company into administration.

Unfortunately, when the previous board were shown the door, the club had very little cash left and still looked at a conciderable yearly loss. The costs have been cut heavily - the club says by approximately 40% - yet, the loss for this financial year may still be around £3-3.5mil. But not all costs are cashflow dependant, depreciation and amortization are not, so in all the club is probably looking at a yearly cash deficit of around £2mil. My guess is, that selling Juke in this window and even getting in 1 or 2 players on loan from PL or permanently from lower leagues will secure the cash flow and get the club close to break even.

If that is true - and mind you it is all guesswork until we see the actual financial reports - then I fail to see why sisu would accept anything but full value for the loans.
I don't think sisu is planning for relegation and they probably won't until it's certain, and in any present negotiation they will not accept any arguement about what may or may not happen in the future.

"The loans cannot be defaulted" - as long as the club/company exists.

If we assume no takeover then SISU will have to continue to fund any losses. Ken D told us that the club was moving towards break-even "by the summer", but that relegation would be "a disaster". So that suggests that SISU are currently funding losses and that when we get relegated (I'd love to think we can stay up, but without significant investement in the squad I can't see how), a further round of cost cutting will be required to attempt to offset the £4m (I believe) in Championship payments that we'll lose. In summary, SISU have to continue to put "good money after bad" and menwhile the club continues in its spiral of decline.

At some point, they decide to either:

1) Sell the club - and (in my opinion) have to at that point accept a significant write down on their loans or
2) Walk away - presumably via administration (and possibly even liquidation) and at that point accept a significant write down on their loans.

That's what I see as the reality of the current situation and that's why I really can't believe that SISU expect to get all their loans paid back.

As the warnings say - "the value of your investment can go down as well as up" - it has!!

akira1984 · Jan 8, 2012

We may put x value on a player but two factors need observing, they're only worth what people are willing to pan and that our financial state being common knowledge doesn't put us in a strong negotiating position

Godiva · Jan 8, 2012

DazzleTommyDazzle said:
"The loans cannot be defaulted" - as long as the club/company exists.

If we assume no takeover then SISU will have to continue to fund any losses. Ken D told us that the club was moving towards break-even "by the summer", but that relegation would be "a disaster". So that suggests that SISU are currently funding losses and that when we get relegated (I'd love to think we can stay up, but without significant investement in the squad I can't see how), a further round of cost cutting will be required to attempt to offset the £4m (I believe) in Championship payments that we'll lose. In summary, SISU have to continue to put "good money after bad" and menwhile the club continues in its spiral of decline.

At some point, they decide to either:

1) Sell the club - and (in my opinion) have to at that point accept a significant write down on their loans or
2) Walk away - presumably via administration (and possibly even liquidation) and at that point accept a significant write down on their loans.

That's what I see as the reality of the current situation and that's why I really can't believe that SISU expect to get all their loans paid back.

As the warnings say - "the value of your investment can go down as well as up" - it has!!

Many seem to think (even pin their hopes on) that sisu's only option is to take whatever is offered, but that is hardly the case.
As I said in my previous post then it would seem like the funding is secured for the rest of the season (through player trading, not more loans).

For almost 9 months it seems like a buyer have been trying to get an offer accepted. So there must be at least one buyer. The first offer was plainly rejected as totally unacceptable.
At that time sisu were actively looking for co-investors, not buyers, and they had a finance plan to get the club through this season.
Now halfway through the season the situation is a bit different.
They haven't succeeded in bringing in co-investors and there may be a number of reasons. The credit crunch and the protests being the most likely.

So their options look down to either stay and keep funding or sell up.

Should they decide to stay, then they'll need to cut costs even more. They would probably sell off almost any player that could command a fee - Bigi, Thomas, Murphy, Wood, Cristie, Hussey etc.
On one hand that would go a long way to secure the finances for a season in league one, and as the Financial Fair Play regulation sets in many clubs will be forced to release players (or face transfer embargo and points deduction) and on the other hand, in that situation the club may be able to replace most players at a lower cost and at lower wages. We would still be able to send a team out each match day.
I am not a financial wizard, but I don't think relegation will set sisu worse than selling cheaply and I don't think administration will be the outcome in a forseeable future.

The protests are all about forcing sisu's hand, but it also put pressure on Hoffman. Should he continue to suggest a deal that is unacceptable to sisu, then he won't get what he wants, and I think he knows it. So the pressure is on him as the fans expect him to conclude a deal in time to strengthen the team and avoid relegation. If he secures a deal too late to save us from relegation, then HE will face the daunting task of cutting costs, selling players and stay within the FFP regulation next season. He might win the battle and get the club but fans love will not last long.

And again ... the deal will be all about the loans. There will be three numbers: Amount down payment, amount to be paid later and an amount (percentage) in interest on the amount to be paid later.

thorn in my side · Jan 8, 2012

Godiva said:
Many seem to think (even pin their hopes on) that sisu's only option is to take whatever is offered, but that is hardly the case.
As I said in my previous post then it would seem like the funding is secured for the rest of the season (through player trading, not more loans).

For almost 9 months it seems like a buyer have been trying to get an offer accepted. So there must be at least one buyer. The first offer was plainly rejected as totally unacceptable.
At that time sisu were actively looking for co-investors, not buyers, and they had a finance plan to get the club through this season.
Now halfway through the season the situation is a bit different.
They haven't succeeded in bringing in co-investors and there may be a number of reasons. The credit crunch and the protests being the most likely.

So their options look down to either stay and keep funding or sell up.

Should they decide to stay, then they'll need to cut costs even more. They would probably sell off almost any player that could command a fee - Bigi, Thomas, Murphy, Wood, Cristie, Hussey etc.
On one hand that would go a long way to secure the finances for a season in league one, and as the Financial Fair Play regulation sets in many clubs will be forced to release players (or face transfer embargo and points deduction) and on the other hand, in that situation the club may be able to replace most players at a lower cost and at lower wages. We would still be able to send a team out each match day.
I am not a financial wizard, but I don't think relegation will set sisu worse than selling cheaply and I don't think administration will be the outcome in a forseeable future.

The protests are all about forcing sisu's hand, but it also put pressure on Hoffman. Should he continue to suggest a deal that is unacceptable to sisu, then he won't get what he wants, and I think he knows it. So the pressure is on him as the fans expect him to conclude a deal in time to strengthen the team and avoid relegation. If he secures a deal too late to save us from relegation, then HE will face the daunting task of cutting costs, selling players and stay within the FFP regulation next season. He might win the battle and get the club but fans love will not last long.

And again ... the deal will be all about the loans. There will be three numbers: Amount down payment, amount to be paid later and an amount (percentage) in interest on the amount to be paid later.

All good points Godiva.

Indeed if one were cynical, one might be forgiven for thinking Hoffman is subtly trying to force administration so he can effectively pick up the club "on the cheap" - hence the Key's tweets, the media campaign, the protests - all designed to "cripple" the club financially whilst he sits back and waits.

As many have said, he is after all a hard nosed businessman - why worry about SISU, bids, loans, if you can secure the club by stealth?

I for one would want to see us avoid administration at all costs, hence I remain very suspicions of Hoffman's real motives.

I would take relegation over administration every time.

I could accept relegation if SISU were to put in place a strategy for bringing the club back - investment in Academy, youth - a 3 year project. Look at Southampton and Charlton. They went down, did not panic, re-evaluated their playing and business philosophy, invested heavily in youth, shared their strategy with the fans and asked for time - and now a few years later we are seeing the results - relative success built upon prudent financial sense, youth.

A medium to long term plan supported by the fans.

Sub · Jan 8, 2012

i would not belive a word SISU said they have lied to many times no matter what division we are in !!!

Stevec189 · Jan 8, 2012

thorn in my side said:
All good points Godiva.

I could accept relegation if SISU were to put in place a strategy for bringing the club back - investment in Academy, youth - a 3 year project. Look at Southampton and Charlton. They went down, did not panic, re-evaluated their playing and business philosophy, invested heavily in youth, shared their strategy with the fans and asked for time - and now a few years later we are seeing the results - relative success built upon prudent financial sense, youth.

A medium to long term plan supported by the fans.

Charlton are really not a great example. Better would be Norwich. http://swissramble.blogspot.com/2011/11/charlton-athletic-into-valley.html
http://swissramble.blogspot.com/search/label/Norwich City

A seven year plan with investment ring fenced for players and not used to prop the business up. However NCFC have a much larger and loyal fan base compared to CCFC! PUSB

rob9872 · Jan 8, 2012

An yone who thinks they are waiting to sell players and then leave imo is wide of the mark. We may get £2-3m for Juke but probably only a % of that initially and as they stay on to recoup more based on appearances etc they incur further costs. What it might do is buy them more time without adding any investment in the hope that further investment can be sought, but I think they must realise now that isn't going to happen. Admin for them is not an option so I think an offer in the region of the opening suggesion of £4m may not be a million miles from what's required to shift them.

cloughie · Jan 8, 2012

accountants can make figures to suit whatever the company want within reason . 37 million yet 12/ 18 months ago it was 20 million so where has the other 17 million gone? not on players or running costs , seems to be a very big jump in loan debt.

Maybe a good way to up the sale price to try and get back the most you can compared to what you really put in

Nonleagueherewecome · Jan 8, 2012

Godiva said:
I can see sisu accepting a bid of £1 - IF the new owners either pay out the loans immidiately and in full, OR pay a large chunk of the loans and agree to a reasonable pay back scheme for the rest. In that case the remaining loans will probably hold an interest of 6-7% pa (mind you, we do not pay interest on the loans today, so that scenario will only increase the operational costs).

It's not about assets and it's not about the shares - it's all about the loans.

So really you mean a bid of 31m plus, then? For a business that is losing money and nothing other than a loss-making machine for the owners? I think a quid is generous under these circumstances.

Just how much of the "loans" is actually money that SISU have put in, and how much is old debt re-structured?

Godiva · Jan 9, 2012

Nonleagueherewecome said:
So really you mean a bid of 31m plus, then? For a business that is losing money and nothing other than a loss-making machine for the owners? I think a quid is generous under these circumstances.

Just how much of the "loans" is actually money that SISU have put in, and how much is old debt re-structured?

No. I mean a bid of £1 to take over the whole business as it stands PLUS an agreement on the loans to the sisu funds.

When sisu took over they negotiated the debts owed by the company on takeover day down to £8m. So their first action was to pay out that £8m with money from the funds converting all external debts to internal debts.
Since then they have funded the operational costs by adding some more milions up to the total debts owed today.
Read more here: http://www.skybluestalk.co.uk/threads/11316-FAQ-2-Money-Talks

Any agreement to take over the club will not be about the price for the shares ... it will be all about how the loans to the sisu managed funds are handled.

SkyBlueScottie · Jan 9, 2012

KersleyDigs said:
Well Liverpool were going to pay £1.5m for Thomas before he got injured! :jerkit:

No they were going to pay 1.5 million for him if he was good enough.

I'mARealWizard · Jan 9, 2012

Godiva said:
No. I mean a bid of £1 to take over the whole business as it stands PLUS an agreement on the loans to the sisu funds.

Which is what Hoff offered originally, with part of the loan paid off at the start and the remainder providing promotion to the PL within 7 years was it?

Godiva · Jan 9, 2012

Godiva said:
No. I mean a bid of £1 to take over the whole business as it stands PLUS an agreement on the loans to the sisu funds.

I'mARealWizard said:
Which is what Hoff offered originally, with part of the loan paid off at the start and the remainder providing promotion to the PL within 7 years was it?

I don't know the details of the original offer, but if you're right, then sisu seem unlikely to accept a deal where any part of the loans can be cancelled out if certain goals are not achieved.
You don't mention anything about interest rates on the outstanding loans, maybe sisu wants interests and Hoffman offered none.

Forget about the share price - the £1 offer always being quoted - the shares are not the stumbling block as they hold no actual value in a company with liabilities that far exceeds the assets.

It's all about the loans and how they are secured and eventually paid back.

ashbyjan · Jan 9, 2012

Godiva - you make some valid points but one other that should be factored into the mix is that if/when we get relegated costs will have to be slashed to meet the shortfall in revenue. This means cutting the playing staff - however as you point out the FIFA Fair Play rules will be coming into effect which will bring many players onto the market. This will not only deflate any transfer fees it will result in the club simply being unable to of load players in the quantity required. They are all contracted and those contracts have to be honoured and players have the right to veto a move and if a move would entail a drop in wages then I can see many simply refusing to go. This obviously would mean that SISU would have to cover the revenue shortfall - a prospect that I am certain is not one they relish. Them hanging on and on makes less and less sense as relegation looms ever more large and I believe that a sensible work out of the loans over an agreed time scale and dependent on various performance factors will start looking ever more attractive.

Stevec189 · Jan 9, 2012

Fair play rules are different for the Championship as I understand it. Taken from a Daily Telegraph article (so could be wrong!)
Championship clubs will be allowed only to spend what they earn from the 2012-13 season while sides in League One and Two will not be permitted to spend more than 55% of their turnover on player wages.
Clubs who transgress are likely to be handed a transfer ban as a first sanction with possible points deductions for major offenders. If it is revenue from the previous season rather than projected revenue that will give us 12 months to sort out the issue (I think). PUSB

lordsummerisle · Jan 9, 2012

Stevec189 said:
Fair play rules are different for the Championship as I understand it. Taken from a Daily Telegraph article (so could be wrong!)
Championship clubs will be allowed only to spend what they earn from the 2012-13 season while sides in League One and Two will not be permitted to spend more than 55% of their turnover on player wages.
Clubs who transgress are likely to be handed a transfer ban as a first sanction with possible points deductions for major offenders. If it is revenue from the previous season rather than projected revenue that will give us 12 months to sort out the issue (I think). PUSB

Nobody can say SISU aren't forward thinking, we've had a transfer ban in for years.

Would SISU accept a £4m bid for the club? (1 Viewer)

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